lululemon athletica inc. (LULU)
UndervaluedFundamental
83
Price
$96.19
Market Cap
$11.25B
Part 1 · What the company is worth
Overview
Lululemon designs and sells premium athletic apparel and accessories — leggings, yoga wear, outerwear — built around a technical, performance-oriented positioning that supports higher prices than mainstream sportswear brands. Unlike most apparel companies, it sells mostly through its own stores and website rather than through department stores or third-party retailers, which lets it control pricing and the in-store experience directly.
How it makes money
Nearly all revenue comes from selling apparel and accessories directly to consumers, split between company-operated stores and e-commerce, with only a small wholesale and licensing contribution. Because it controls its own retail channel, lululemon has historically relied on scarcity and full-price selling rather than heavy discounting, though markdown activity has increased recently as growth in its home North American market has slowed.
Competitive moat
Brand · NarrowLululemon built a loyal community around its brand and technical product quality that has supported premium pricing for years, reinforced by a direct retail model that keeps the shopping experience consistent. That advantage has weakened lately: revenue in its core Americas market has been flat to declining even as newer competitors like Alo Yoga and Vuori chip away at its positioning.
What drives demand
CyclicalPremium apparel is discretionary spending that consumers cut back on before necessities when budgets tighten, and lululemon's pricing sits well above mainstream athletic wear, making it more exposed to a pullback than value-oriented competitors. Growth has become increasingly dependent on international expansion, especially China, to offset a maturing North American market.
Key risks
- Slowing growth in the core Americas market — Net revenue in the Americas has recently declined even as international regions grew, raising the question of whether the home market is approaching saturation or losing share to newer competitors.
- Reliance on continued brand desirability — Premium pricing only holds as long as the brand stays culturally relevant; if consumer tastes shift toward newer athleisure labels, lululemon would likely have to discount more heavily, compressing margins.
- Growing reliance on China for growth — China Mainland has become one of the fastest-growing regions for the company, which increases exposure to Chinese consumer sentiment, currency movements and geopolitical or regulatory friction between China and the United States.
- International sourcing and tariff exposure — Apparel is manufactured through contract factories across several countries; changes in tariffs or trade policy directly raise input costs that the company must either absorb or pass on to price-sensitive customers.
The case for
Buyers argue that international expansion, led by China's strong double-digit growth, can more than offset a maturing North American business, and that lululemon's direct retail model and brand strength still support pricing that mass-market competitors cannot replicate.
The case against
Sellers fear that a declining Americas business signals the brand has lost some of its premium cachet to newer athleisure labels, and that increased markdown activity shows lululemon is already having to compete more on price than its positioning was built to require.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
Generated on September 19, 2026 with claude-haiku-4-5 — shared with all users
Nike is the largest seller of performance athletic apparel worldwide and competes with lululemon for the same women's training, running and yoga wardrobe, both in its own stores and direct-to-consumer channels.
adidas competes for the same training, running and studio apparel customer, and is lululemon's most direct rival in the European and Chinese markets it is expanding into.
Alo Yoga sells premium yoga and studio-to-street apparel at lululemon price points and in the same city shopping districts, and roughly two thirds of its shoppers also buy from lululemon.
Vuori targets the same premium activewear customer with comparable prices and mall and street-level stores, and about half of its shoppers also shop at lululemon.
Through its Athleta banner, Gap sells performance and lifestyle apparel for women and girls in North American stores and online, the core segment lululemon built its business on.
Under Armour competes for the same technical training apparel and footwear purchases in North America and Europe, though at generally lower price points than lululemon.
Balance Sheet & Liquidity
Revenue
$11.09B
Trailing 12 months (through 8/2/2026)
Net Income
$1.42B
Trailing 12 months (through 8/2/2026)
Free Cash Flow
$922M
Total Equity
$4.96B
Total Liabilities
$3.49B
Current Ratio
2.19
Interest Coverage
-
Debt/EBITDA
0.79
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$291.89
Current Price
$96.19
Margin of Safety
+67.0%
Fair Value Range
$189.73 - $394.05
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
7.90
ROE
31.8%
P/B Ratio
2.12
P/FCF
7.50
Gross Margin
56.1%
ROIC
23.4%
Profitability Radar
Value Creation (Economic Moat)
ROIC
23.4%
WACC
7.8%
ROIC − WACC
+15.6 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (21)
- EPS shows upward trend
- EPS CAGR 20.59%
- ROIC 23.4%
- Gross Margin 56.1%
- P/FCF 7.50
- P/B Ratio 2.12
- Debt/Equity ratio
- Operating Margin 17.8%
- Positive Free Cash Flow
- Current Ratio
- Debt/EBITDA
- Return on Tangible Assets
- Low reliance on intangibles
- Price below Graham Number
- ROE 29.7%
- Revenue Growth 5Y 20.3%
- Earnings Surprise avg 6.6%
- PEG Ratio 0.34
- Earnings Quality (OCF/NI) 1.40
- Share Dilution -3.9%
- Piotroski F-Score 6/9
Failed (5)
- Price CAGR 4.64%
- CapEx intensity
- DCF valuation (Overvalued)
- Analyst Consensus 5% Buy
- Net Margin Trend 12.8% vs 16.4%
Unavailable (2)
- Dividend Payout NaN%
- Interest Coverage
Piotroski F-Score
Mixed signals: some areas need attention
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Ms. Meghan C. Frank | Interim Co-CEO & CFO | 48 |
| Mr. Andre Maestrini | Interim Co-CEO, President & Chief Commercial Officer | 61 |
| Mr. Edward Dagnese | Chief Supply Chain Officer | 59 |
| Ms. Nicole Neuburger | Chief Brand & Product Activation Officer | 43 |
| Mr. Howard Brett Tubin | Vice President of Investor Relations | - |
| Ms. Shannon Higginson J.D. | Chief Legal & Compliance Officer | - |
| Ms. Susan Gelinas | Chief People & Culture Officer | - |
| Jennifer Battersby | Senior Vice President of Product Engine | - |
| Ms. Stacia Jones | VP and Global Head of Inclusion, Diversity, Equity & Action (IDEA) | - |
| Ms. Elizabeth Binder | Chief Merchandising Officer | - |
Audit Risk
7
Board Risk
8
Compensation Risk
10
Shareholder Rights Risk
9
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2026-03-17
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-09-03
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-09-14
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for LULU, sourced from Markets Gazette.
- 19d agoNEGATIVELululemon’s new CEO inherits a mess that looks like the one she left at Nike
Lululemon's newly appointed CEO inherits a challenging turnaround situation, with the company struggling to regain consumer interest in its athletic apparel. The article suggests the new leadership faces significant hurdles, drawing parallels to previous difficulties encountered at Nike. This implies a need for substantial strategic shifts and product innovation to revitalize brand appeal and sales momentum. Investors will be closely watching for concrete plans to address declining demand and competitive pressures in the athleisure market.
- 20d agoNEGATIVELululemon’s Newest Bear Sees More Pain for Stock After 81% Rout
BMO Capital Markets initiated coverage on Lululemon Athletica Inc. with an 'underperform' rating, citing concerns that the athletic wear company is losing market share to competitors and experiencing accelerating sales declines. This pessimistic outlook follows an 81% rout in the stock price, suggesting that a turnaround will be challenging and protracted. Investors should note that the initiation of coverage with a bearish stance by a significant financial institution often precedes further downward pressure on the stock, as it may influence institutional and retail investor sentiment.
- 23d agoPOSITIVEBurry chiama Lululemon il 'trickster' del suo portafoglio: compra il crollo
Michael Burry, known for his contrarian investment style, has revealed a significant stake in Lululemon Athletica Inc. (LULU), calling it the 'trickster' in his portfolio. Despite LULU shares plummeting over 50% year-to-date due to disappointing product launches, declining North American sales, and a revised earnings forecast pushing the stock below $100, Burry is actively buying. He believes the market is overreacting and pricing current issues as permanent, rather than anticipating a potential recovery. Burry's strategy focuses on acquiring the stock at a depressed valuation, betting on a turnaround rather than immediate earnings growth.
- 27d agoNEGATIVELululemon Drops to Eight-Year Low With New CEO Inheriting a Mess
Lululemon Athletica Inc. has revised its full-year financial outlook downwards for the second consecutive quarter, signaling significant challenges for incoming CEO Heidi O’Neill. The company now anticipates revenue between $10.35 billion and $10.5 billion for the fiscal year ending early 2027, a reduction from its prior forecast. This marks the first reported decline in comparable sales since the pandemic era. The lowered outlook suggests potential headwinds in consumer demand or competitive pressures impacting the athletic apparel giant.
- 28d agoNEGATIVELululemon bets on ‘away from body’ pants as customers sour on form-fitting leggings
Lululemon's stock is under pressure as the company shifts its product strategy towards 'away from body' pants, signaling a potential departure from its core form-fitting leggings. This pivot comes amid customer dissatisfaction with its current fashion assortment and a disappointing outlook provided by the company. Analysts are scrutinizing this strategic change, which could impact sales and brand perception. Investors are watching closely to see if this new direction can reignite growth or alienate its loyal customer base.
via Markets Gazette